To examine manufacturing’s role in economic recovery, students, faculty and representatives of MIT’s corporate partners gathered Thursday afternoon in MIT’s Wong Auditorium for a forum on “Rebuilding the American Economy.” The event was sponsored by the Department of Political Science and by Production in the Innovation Economy (PIE), a new MIT initiative that seeks to analyze the relationship between innovation, production and job creation. Throughout the forum, participants sought answers to a pervasive question: Can the United States keep its innovative edge if it loses its production capabilities?
MIT President Susan Hockfield opened the forum by harkening back to a similar period of economic malaise in the mid-19th century — when, as it turns out, the country was on the cusp of the Industrial Revolution. At the time, MIT founder William Barton Rogers “lamented” the citizenry’s lack of scientific expertise, founding MIT, in part, to cultivate a new generation of scientists and engineers who would develop innovative materials and manufacturing processes.
“Once again, as a nation, we find ourselves at a moment of difficult transition,” Hockfield said. “After more than a century of industrial success, America needs to revise its economic assumptions once again.”
Hockfield, who has been appointed by President Barack Obama to co-chair (with Dow Chemical CEO Andrew N. Liveris) the administration’s new Advanced Manufacturing Partnership, said that in touring the country to talk with people about the state of U.S. manufacturing, she’d heard from two evenly divided camps.
“Half the people I talk to say, ‘This is the most important thing for the nation,’ and the other half look at me quite quizzically, as if to say, ‘Didn’t you get the memo? America doesn’t do manufacturing anymore’ — a very worrying response,” she says.
Made in China
Ron Bloom, who until last month served as Obama’s senior counselor for manufacturing policy, has observed a similar ambivalence. Bloom, who gave yesterday’s keynote address as part of the Department of Political Science’s Distinguished Speaker series, cited a recent poll in which only 40 percent of Americans believe the United States is the world’s economic superpower. Of the remaining 60 percent, two-thirds believe China holds the top economic spot. By way of explanation, Bloom says people simply responded, “Because China makes everything.”
While Bloom said this isn’t true — in fact, the United States manufactures about as much as China, and its GDP far eclipses that of China — there is no doubt that China is a major manufacturing force, a fact that has become synonymous with economic power in the minds of many Americans.
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“The political reality is that manufacturing serves as a symbol for the American people for our economic might,” Bloom said. “And its decline serves as a proxy for the decline in our economic might.”
China’s rise in the world economy poses a challenge for American enterprise, according to Edward Steinfeld, professor of political science. Steinfeld, who co-directs the China Energy Group in the MIT Industrial Performance Center, quoted U.S. Secretary of Energy Steven Chu, who has referred to China’s rise as a “Sputnik moment, to which the U.S. has to respond.”
Restarting the U.S. economy
In particular, Steinfeld pointed to the need to invest more heavily in commercial startup demonstrations. He and his colleagues recently interviewed small entrepreneurial firms in the energy sector, both in Cambridge and Silicon Valley. The group found that many firms were unable to find domestic financing to build their first commercial-scale demonstration plants, a crucial step in scaling up new technologies. Instead, Steinfeld said, these firms found financial support and manufacturing capacity in China, where “there’s a ready and willing audience.”
While there are risks to investing in any and every commercial venture, Steinfeld says the United States can learn from China’s economic policy, which fosters innovation, “ensuring that innovation will happen on their soil.”
Yet-Ming Chiang, the Kyocera Professor of Ceramics and co-founder of the advanced battery developer A123 Systems, says that initially, he looked to China for opportunities to scale up his company’s advanced lithium-battery design.
“There was no advanced manufacturing capability in the United States,” Chiang said. “We had the right product, but where to manufacture?”
Chiang’s company eventually built six factories in China to manufacture its higher-power, faster-recharging lithium-ion batteries, which at the time powered small devices such as power tools.
A123 Systems has since found significant support in the United States to develop batteries for electric vehicles, and the company has built two manufacturing plants in Michigan — one in Livonia, the other in Romulus — using the knowledge it gained from China.
However, Chiang says there needs to be much more investment in advanced manufacturing to make any appreciable dent in markets like electric transportation. Thirteen million cars are sold annually in the United States; to boost electric vehicles to 10 percent of those sales, Chiang says the United States would have to build more than 40 manufacturing plants on the scale of the Livonia plant, a 291,000-square-foot facility.
Other MIT scientists speaking at the forum echoed Chiang’s call for advanced-manufacturing support. Bernhardt Trout, professor of chemical engineering, called for a retooling of the pharmaceutical-manufacturing industry. Trout is developing a system called “continuous manufacturing,” which would cut the cost of pharmaceutical production by combining two major processes: drug substance production and drug tablet production.
“Technology-focused manufacturing would open up jobs in the United States,” Trout said. “It would require expertise not in operating forklifts, but in understanding technology.”
Productivity at all levels
Robert Solow, Institute Professor emeritus and Nobel laureate in economics, offered a counterpoint to the supporters of advanced manufacturing, saying that while manufacturing matters, “other things matter too”: specifically, a high and fairly distributed per-capita income. To attain a relatively high income across the country, Solow says it’s not necessarily manufacturing, but productivity in general that matters, particularly in non-manufacturing sectors such as the services industry.
However, Solow acknowledged that a modest increase in manufacturing productivity could help the economy.
“Manufacturing will provide employment, [although] we will never go back to having a third of employment from manufacturing,” Solow said. “But I’d settle for a couple percent, because it’s a way to raise income per head.”
Bloom says that regardless of which sector packs the most punch in terms of productivity, innovation is what arguably sets the United States apart from the rest of the world. In order to rebuild the economy, Bloom says it’s necessary to examine the relationship between manufacturing and innovation, and to consider the view of analysts who warn that “if manufacturing goes, innovation follows.”
“If this is true, where do we go?” Bloom said. “We’re kind of left with nothing to bring to the party. Given the consequences if that is true, we ought to be erring on the side of caution.”
Other forum participants included Richard Locke, the Class of 1922 Professor of Political Science and Management; Suzanne Berger, the Raphael Dorman-Helen Starbuck Professor of Political Science and co-chair of PIE; and Kripa Varanasi, d’Arbeloff Assistant Professor of Mechanical Engineering.